Home mortgage surcharge approved by General Assembly

HARTFORD — The General Assembly on Wednesday slapped a yearly $12 surcharge on mortage policies across the state to help thousands of residents in eastern Connecticut fix crumbling home foundations.

"I’m hearing constituents ask why do I have to contribute to a problem that I’m not having," said state Sen. Paul Doyle, D-Wethersfield.

"But the overall impact is to drive down the real estate market in a section of the state," Doyle said. "We have look beyond our instinct to focus on ourselves."

The Senate by a mostly partisan vote of 19-17 joined the House in passing a bill that will create a $10 million per-year fund to help repair foundations that are crumbling in more than 50 towns in the eastern portion of the state because of a natural substance used in the concrete.

The bill now heads to Gov. Dannel P. Malloy for an expected signature.

About $1 million of the Healthy Homeowner Fund will be allocated for radon and lead paint abatement and to help homeowners in a New Haven neighborhood where some houses are sinking.

Insurance companies have refused to pay for the crumbling foundations and attempts to gain federal money failed. The state budget passed last year borrowed $100 million over five years to help with repairs, but the damages are expected to reach into the billions.

The cost of fixing the foundations is estimated to cost $150,000 or more per house. The foundations are literally cracking and falling apart.

Supporters of the bill said a similar problem is occurring in Canada, and pointed out the loss of home value is so severe that some towns face the possibility of becoming insolvent as their tax base evaporates.

"I can’t imagine being in their shoes," said state Sen. John Kissel, R-Enfield, referring to the impacted homeowners. "There are thousands of people who are terrified to come forward and say this is happening to their home."

Cathy Osten, D-Sprague, said she has heard horror stories over the foundations, noting some residents are left with a home with no value.

"This is the right thing to do," Osten said. "It’s the moral thing to do and it’s $12 a year for people."

But some senators pointed out that while the surcharge sounds like a fix the money generated is not enough to solve the problem.

"This is an inadequate solution," said state Sen. Joe Markley, R-Southington, who voted against the bill.

"With have a million-dollar solution for a billion dollar problem," Markley said. "The problem will not be nearly taken care of by this $12 surcharge and it gives people that impression that it will."

State Sen. Henri Martin, R-Bristol, said it’s not fair all residents to pay for the failure of insurance companies to cover the crumbling foundations.

"I feel for the people who have this issue and I understand the economic impact but I don’t feel the insurance companies are doing what they are in the business to do, which is to help policy holders," said Martin, who estimated the final cost is close to $5 billion.

State Sen. Mike McLachlan, R-Danbury, also said the money is not enough to solve the problem.

"This is not the fix that we need,” McLachlan said. “The resources already committed before this $10 million is added is just scrapping the surface. We are not really helping eastern Connecticut."

Still, State Sen. Anthony Guglielmo, D- Stafford, said there is no time to worry about blame or find another solution.

"It’s the most serious situation I have seen," Gugielmo said. "It’s a question of pay now or pay later. People are under tremendous stress. You actually had suicides in Canada."